HSBC chairman: Transition financing needed to achieve 2050 ‘net zero’ climate goals, divestment not the answer
- British charity ShareAction has targeted the bank over its financing for the fossil fuel industry
- Overnight divestment not the best option for the environment or affected communities, says Mark Tucker
HSBC chairman Mark Tucker on Monday defended the need to provide transition financing to clients to spark environmental change and reach the lender’s goal of being “net zero” in terms of carbon emissions by 2050.
Speaking at the Asian Financial Forum, Tucker said climate change is probably “the most urgent and serious threat” faced by the global community and the lender has an obligation to tackle that, but it will not be achieved by stepping away from clients, particularly in emerging markets.
“Divestment is not the best option for the environment or for the people and the communities that rely on these traditional industries,” Tucker said. “Ninety-five per cent of energy needs are still met by fossil fuels. The renewable market is still in its infancy.
“There’s not a current proven way to help energy supply meet the demand if there’s mass divestment. Fossil fuel dependency is more widespread than energy. They’re also used in the production of steel, cement, packaging, etc”
04:18
Hong Kong’s 11-year-old climate activist on a mission to urge adults help save future generations
There’s also a “significant business opportunity” in providing that transition financing, Tucker said.
The group, which has previously targeted HSBC and other lenders over environmental issues, claims HSBC is the second-largest financier of the fossil fuel industry in Europe and 12th largest globally, providing US$86.5 billion in financing to fossil fuels companies since the Paris climate agreement was signed in 2016.
Tucker said that emerging markets are “most dependent” on fossil fuels globally and Asian economies should play a large part in the discussions at the UN Climate Change Conference, known as COP26, in November. He called it a “key moment” in unlocking low-carbon goals globally.
“If you just divest, the risk is it effectively increases energy, poverty and economic instability,” Tucker said. “Just because we, as a bank, and others of the big banks divest, means that it will just force heavy fossil fuel users to go elsewhere, thereby just moving the problem.”
Tucker said the bank wants to help all of its customers to “decarbonise”, while assisting in the development of new low-carbon technology.
“This is the most significant contribution that HSBC can make to the fight, and the most effective way is to help the global economy get to net zero,” Tucker said.
“There is a transition. We’re going to [undertake] every element to speed up the transition, but going overnight into things like divestment will make things worse, not better.”